Property tax increase not anticipated to pay for bond financing
RALEIGH – The Local Government Commission (LGC) tabled a Guilford County request to approve $1.7 billion in bonds for school construction, and did not vote on a controversial project in New Hanover County after a motion for approval failed to garner a second. A financing request for a $177 million Johnston County school bond, pending a November referendum, was approved.
The LGC, chaired by State Treasurer Dale R. Folwell, CPA, and staffed by the Department of State Treasurer (DST), has a statutory duty to approve most debt issued by units of local government and public authorities in the state. The commission examines whether the amount of money units borrow is adequate and reasonable for proposed projects and confirms the governmental units can reasonably afford to repay the debt. It also monitors the financial well-being of more than 1,100 local government units.
There were three major school bond issues on the agenda Thursday, Sept. 22, along with more than a half-billion dollars in requests from Raleigh (Wake County) and Charlotte (Mecklenburg County) for mostly parks and recreation projects.
Guilford County’s request for approval of a $1.7 billion bond package that was approved by voters in the May primary election was put on hold. But Wake County’s request for $883.9 million and Johnston County’s application for $177 million were given the green light by the LGC, and now will be placed before voters in referenda on the Nov. 8 election ballot.
The Guilford County School System plans to build three new schools, demolish and rebuild 19 schools, fully renovate 12 schools and invest about $363 million in safety and technology upgrades. No tax increase is expected. The school system now has 126 schools and more than 300 buildings.
However, LGC members had questions about the county taking on more debt, how it would be paid back and whether falling school enrollment trends justify the need. A $300 million bond package was approved in 2020. While voters approved the $1.7 billion in bonds in May, they rejected a referendum to raise sales taxes to pay for it. The county plans to use property taxes instead. School officials said schools in some areas are overcrowded and are badly deteriorating. In tabling the matter, the commission directed county officials to respond in 10 days with enrollment numbers.
Wake County will build five new schools and design another. Major renovation or replacement of another seven schools is being considered. Costs for those items and improvements at other schools total about $664.7 million. The balance of the bond money will be directed to Wake Technical Community College. It will pay for a new Health Sciences Building and parking deck adjacent to WakeMed Main Hospital; relocation of Western Wake Campus to the Apex/Holly Springs area; construction of a Workforce Development Building at the Western Wake Campus; a new Cyber Science Building and parking deck on the RTP Campus; and renovations at Southern Wake Campus and systemwide. A tax increase of 1 cent per $100 of property valuation is anticipated.
Johnston County school officials do not anticipate a tax increase to pay for its $177 million financing. The county wants to build two new schools and two additions, and acquire land, all of which could lead to closure of about half of the district’s 186 mobile classrooms. School officials say the expansion is necessary because the county has the fastest growing population in North Carolina and ninth fastest in the country.
After lengthy discussion, LGC members denied approval of New Hanover County’s application for $80 million in financing for a public-private partnership to build a mixed-use development known as Project Grace in downtown Wilmington. The request died after a motion for approval failed to get seconded. The project, which includes a new library and museum, has been subject to intense scrutiny from LGC members due to the nature of the financing agreement under which the county would sell the land to the developer and then lease it back.
In other business, LGC members approved an application for $275 million in general obligation bonds submitted by Raleigh (Wake County) for a variety of parks and recreation projects. The financing will be paid back with a property tax increase of 4 cents per $100 valuation. New facilities, expansion and upgrade of existing facilities, park and greenway expansions are on the project list. Dix Park renovation of buildings for office and operations space is included, as is work on the Chavis Park Aquatics Center and Plaza.
A $226 million request from Charlotte (Mecklenburg County) to issue general obligation bonds was approved. Of that amount, $146.2 million will go towards building, reconstructing, enlarging, extending and improving streets and roads; $29.8 million will be used for neighborhood improvements; and $50 million will be used to build low- and moderate-income housing projects.
The LGC approved an application for $97 million in general obligation bonds from Fayetteville (Cumberland County) for public safety improvements, streets and sidewalks, and rehabilitation of multifamily and single-family housing.
Matthews (Mecklenburg County) was given a green light to issue $35 million in general obligation bonds. Of that, $21 million will be dedicated to transportation projects to widen, extend, pave, grade and resurface existing streets, and acquire land to build additional streets. The other $14 million will be used to acquire, build, renovate and expand existing parks and recreation facilities. That includes a 93-acre park, an all-abilities playground and a multi-use path around the downtown area of the city.
North Carolina’s stock of affordable housing is not keeping pace with population growth, a dynamic heightened by inflation of home prices, higher interest rates on borrowing, and corporate investors becoming more active in the single-family housing market. As a result, many municipal housing authorities are stepping in to create more public sector housing. In the fiscal year that ended June 30, the LGC approved more than $418.5 million in financing to build or renovate 2,993 apartment units.
That trend is ongoing, and the LGC approved a series of financing requests on Thursday from:
Housing Authority of the City of Durham (Durham County), $22.5 million, to be loaned to 300 East Main LLC to acquire, build and equip a 110-unit multifamily rental housing development.
Greensboro Housing Authority (Guilford County), $17 million, for a loan to Townsend Trace to acquire, build and equip a 180-unit rental facility; and $17 million to loan to Arlington Trace to acquire, build and equip a 180-unit multifamily residential rental facility.
Inlivian (Mecklenburg County), $12.3 million, to loan to Ballantyne Seniors to build an 82-unit multifamily senior facility; and $23.1 million to loan to WCO Kingspark to acquire, build and equip Kingspark Commons, a 176-unit multifamily facility.
Raleigh Housing Authority (Wake County), $12 million, to loan to BRAD Thrive at Renaissance to acquire, build and equip Thrive at South End, a 90-unit multifamily project.
Wake County Housing Authority, $32.5 million to loan to Broadstone Walk to acquire, build and equip a 164-unit multifamily residential rental facility.
The LGC approved an application from Charlotte for $125 million in bond anticipation notes (BAN) to repair, replace and improve storm water facilities to properly serve users and to remain in full compliance with state and federal requirements. A BAN is a short-term interest-bearing security issued to make payments in advance of a larger bond issue in the future.
Graham (Alamance County) received approval of nearly $81.5 million in revolving loan funds to replace outdated sewer infrastructure and for a new maintenance building to increase capacity to meet growth demands over the next 20 years.
Wake Forest (Wake County), whose population has grown 58% over the past 10 years, was approved to obtain $75 million in general obligation bonds to build, extend, reconstruct and widen streets and sidewalks. The town will use portions of the money for parks and recreation facilities, greenway improvements and a parking deck as part of a public-private partnership for a mixed-use retail/residential site. A property tax increase of 3 cents per $100 valuation is anticipated.
The LGC approved an $18.8 million request from Hendersonville to improve fire and emergency services facilities, acquire new firefighting vehicles and equipment and for recreation facilities.
Randolph County will build a Farm, Food and Family Education Center, and an Agricultural Events Center and Office Building with $4 million in financing approved by the LGC. The installment purchase contract allows payments to be made over time rather than all up front.
Spring Lake (Cumberland County) obtained the go-ahead from LGC members for a $1 million installment contract to build a fire station. Town officials originally closed on the loan without required LGC approval.
Two other requests were tabled. Kings Mountain (Cleveland and Gaston counties) is seeking $6.9 million in financing to build a new electric substation and transmission lines, and for natural gas lines. Commission members wanted more information about use of electric fund revenues being shifted to the general fund. Sunset Beach asked for approval of $1.5 million to purchase 4.28 acres of land on Sunset Beach Island, but commission members wanted additional information.
In a departure from custom, the LGC meeting was held at the Eastern 4-H Center in Columbia. Treasurer Folwell chose Tyrrell County as the first venue for an initiative to take state business out of Raleigh to the people of North Carolina, and to introduce LGC members to the challenges faced by rural communities that come before the commission. The Nov. 1 LGC meeting will be held in Cullowee.